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Glossary

De minimis provision

Paris Club agreements define a "de minimis" amount. When the amount of the claims of a Paris Club creditor potentially covered by the debt treatment agreement is lower than this amount, this creditor participates in the meeting as an observer and does not have to apply the debt treatment to its claims. This rule aims at avoiding debt treatments that do not have a significant impact in terms of debt relief and would be costly to implement.

Debt reduction, DR

In the context of a concessional treatment, creditors may usually choose among a number of options to provide the required debt reduction in net present value. When the creditor chooses the "DR" option, the net present value reduction is achieved through a cancellation of part of the claims.

Debt service reduction, DSR

In the context of a concessional treatment, creditors may usually choose among a number of options to provide the required debt reduction in net present value. When the creditor chooses the "DSR" option, the net present value reduction is achieved through a rescheduling of the claims at an interest rate lower than the appropriate market rate.

Debt swaps

Paris Club agreements may contain a provision enabling creditors to voluntarily engage in debt swaps. These operations may take the form of debt-for-nature, debt-for-aid, debt-for-equity or other local currency debt swaps. To ensure full transparency between creditors, debtors and creditors submit a report to the Paris Club Secretariat on the transactions conducted.

Debts cancelled

The reduction in net present value of the debt rescheduled by Paris Club creditors is considered as a cancellation.

Debts due

Medium and long term debt due to Paris Club creditors before the specific Paris Club agreement.

Debts rescheduled

Debts treated, less debt cancelled.

Debts treated

Debts consolidated pursuant to the specific Paris Club agreement.

Decision point

In the context of the Heavily Indebted Poor Countries (HIPC) initiative, at the decision point, the Executive Boards of the IMF and World Bank formally decide on a country's eligibility, and the international community commits to provide sufficient assistance by the completion point for the country to achieve debt sustainability calculated at the decision point.

Deferral

A debt treatment may defer the payment of debt due immediately or in the near future to a later date. When a new long-term payment profile is defined, the treatment applied is not a deferral, but a reprofiling or a rescheduling.